Federal Reserve expects low interest rates until ‘late 2014’

The Federal Reserve announced Wednesday that it did not expect to raise interest rates until “late 2014,” as the central bank pushed back its expectations for when the economy would pick up steam.

In its latest statement, the Federal Open Market Committee (FOMC) said economic conditions, including subdued inflation, are likely to warrant “exceptionally low levels” until the tail end of 2014. Previously, the Fed had said it expected low rates to persist through mid-2013.

In announcing the longer timeframe, the Fed said it was intended “to support a stronger economic recovery.”

The decision could be an indication that the central bank now believes the economy needs more time to gain momentum before it can tighten borrowing, but the Fed did not provide any statement indicating that concerns about economic growth had increased.

Information received since the last FOMC meeting in December indicate that the economy is “expanding moderately,” despite slowdowns in global economic growth headlined by Europe’s struggles.

The Fed noted that the unemployment rate in the United States, despite a pair of strong jobs reports in the last two months, “remains elevated.”

The Fed was silent on whether it might consider further “quantitative easing” to boost the economy, even as market participants are keeping a close eye for any indications. The Fed has embarked on similar massive bond-buying programs twice before, in an effort to further lower borrowing costs.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, dissented from the Fed’s statement, saying he preferred to leave out describing the timeframe of when the Fed might hike rates again.

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